Pursuant to The Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (Corporate Tax Law) issued by the United Arab Emirates (UAE) on 09 December 2022, the new Federal Corporate Tax (Corporate Tax) is introduced as an effort to help UAE achieve strategic objectives and accelerate its efficient transformation.
Under the Corporate Tax Law, UAE businesses with financial years starting on or after 1 June 2023 will be subject to the new corporate tax regulations.
By aligning these requirements and procedures with international practices, the government is facilitating compliance across all sectors through a well-balanced and transparent business environment.
What is Corporate Tax in the UAE?
Taxes levied on corporations and businesses on their net incomes are known as Corporate Taxes, otherwise referred to as “corporate income taxes” or “business profits taxes” in other jurisdictions.
From the start of the first financial year, taxable persons or businesses are subject to corporate tax in the UAE. Corporate Tax shall be imposed on the Taxable Income at the following rates:
- 0% on the portion of the Taxable Income not exceeding the amount of AED 375,000 specified in a decision issued by the Cabinet at the suggestion of the Minister
- 9% on the Taxable Income amount that exceeds AED 375,000 (the lowest rate among GCC countries)
Who must register for the new Corporate Tax?
According to official announcements, registration for corporate tax and the acquisition of a Corporate Tax Registration Number will be required for all Taxable Persons (including Free Zone Persons).
Note that requests for registration may also be issued by the Federal Tax Authority for certain exempt persons.
Within 9 months after the end of a tax period, Taxable Persons must file a Corporate Tax return and make Corporate Tax payments for tax periods during which returns are filed.
When is the registration period for UAE Corporate Tax?
UAE-based companies of certain categories may apply for early registration between January 2023 and May 2023. These selected companies will receive email and SMS invitations from the Federal Tax Authority (FTA) to register for their corporate tax through the EmaraTax platform for digital tax services.
As for other businesses, a later date will be provided by the FTA when registration opens with sufficient time to comply with the updated obligations. Those with a financial year beginning on 1 June 2023 will be given priority in advance.
In addition, a detailed explanation of The Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, along with more information on corporate tax registration will be provided by the FTA in due course.
Visit BBCIncorp’s site for more updates and information on the adjustment, or contact us via email@example.com if you have any further queries regarding doing business in the UAE for timely assistance.
Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.
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